One major step in understating your finances and making a viable strategy for spending, saving, and investing is evaluating your hours in dollars. You should be clear about the time you spend in a day to cover your daily expenses. Take it a step further and you would like to calculate the number of days in a month you need to work only to meet your basic monthly expenses.
So at this first step of budgeting, it is just natural for a person to ask, ‘$20 an hour is how much a year?’ Or you may want to calculate in the opposite direction starting with your annual salary and working back to know your hourly income.
So, let’s learn how to calculate your salary so you know the balance between your daily, weekly, and monthly expenses against income.
How Many Hours in A Year?
To calculate the annual earning, we need to know the number of hours you work in a given year. Unsurprisingly, the number of workable hours differs from person to person and job to job. Some people make it a point to take vacations every year. They demand an annual leave of two weeks to ensure a work-life balance.
Others’ opinions about work-life balance and workable hours can be different. They may expect fewer hours every week to maintain their quality of living. Still, others would want to exert more to celebrate their prime, money-making years.
Although most white-collar jobs require the executive to put in 40 hours or more a week, blue-collar workers may face different requirements based on jobs, complexity, and need.
Before you calculate the annual income you would take home because of your job study the number of hours you would work every week. Also, understand the number of weeks you would attend the job.
This article will consider the three most common situations. The first case will assume that you will work 40 hours a week for 52 weeks a year. In this case, a worker should work 2080 hours in a year.
The second case will take weekly 40 hours with 50 weeks of annual work. This situation makes the most common example among workers. It gives 2000 work hours in a year.
And the third situation will assume 37 hour-workweek with 52 weeks in attendance. With it, you are looking at 1,924 hours of performance every year.
$20 An Hour Is How Much a Year?
Now we have defined three cases. So, we can move towards calculating gross yearly income in these cases.
In the first case, for 2080 hours in a year, the worker should get $41,600 (2080 x $20).
The second case will yield a yearly salary of $40,000 with a total of 2000 hours worked (2000 x $20).
Workers will earn $38,480 every year after working 37 hours every week of the period.
In other words, the gross yearly income for the hourly rate of $20 hovers between $38,000 and $41,000. You should note that this figure gives a gross figure. From it, you may still have to pay taxes as well as make social security payments.
Also, if you work overtime, you may get a different figure at the end of the year. The tax rates change from state to state and depend on income level. So, if you are residing in New York and your only income is from the job at an hourly rate of $20, all your taxes will sum up at 20.1% giving you a take-home pay of only $15.98 per hour.
When you apply this rate to your annual salary, the take-home salary becomes $33,238 for the first case, $31,960 for the second, and $30,745 for the third case.
If you work manual jobs or hourly tasks, you may want to convert your per hour rate to know your annual earning capacity. You would want to turn this calculation backward if your job gives a yearly number and you are trying to figure out your cash status for every month.
Let’s see a few calculations that may help you. But before we begin, we shall discuss how to proceed with these calculations.
Whenever you convert your hourly rate into annual income, you start with the rate you get for an hour of work and the number of hours you work in a given year on average. Simply multiplying these two numbers will give you your gross wage for a year.
On the other hand, backward calculation of salary from yearly compensation to hourly rate also uses a total number of hours you are expected to work in a given year. As a next step, you would take your annual salary and divide it by the number of hours you have calculated earlier.
For example, if your question is, ‘$25 an hour is how much a year?’ you have to multiply this rate with the total number of hours your employer wants you to work in a year. Let’s suppose that you work 2000 hours in a given year. In that case, your gross annual income will be calculated as follows:
Rate per hour x number of hours worked in a year
= $25/hour x 2000 hours
If your question is, ‘$15 an hour is how much a year?’ all you have to do is to use to above mentioned formula and insert $15 instead of $25 in it. By the way, this calculation will yield $30,000 as an answer.
A similar calculation can be done for the question, ‘$18 an hour is how much a year?’ Taking total hours as 2000, the annual salary for $18/hour rate will translate into $36,000. If you want to know 17 an hour is how much a year, the answer is slightly different from the previous calculation and stands at $34,000.
Unsurprisingly, a higher value for the hourly rate will translate into a higher annual salary. Let’s consider this situation: $30 an hour is how much a year? With a 2000 hour year, we get the following calculations for this problem:
Rate per hour x number of hours worked in a year
= $30/hour x 2000 hours
Now, can you use the same formula and find an answer to this question: $35 an hour is how much a year?
Now, we will look at how to work back from the annual salary to get a rate for every hour. This calculation is interesting for those executives who are in white-collar jobs as these people get an annual figure in the salary package. For the, let’s suppose the question is, ‘40000 a year is how much an hour?’
The formula to convert the annual rate to hourly is:
Rate per hour = annual salary/hours worked in a year
For the following calculation, we are assuming that a work agreement requires 2000 hours of work in a year.
Rate per hour = $40,000 / 2000 hours
= $20/ hour
Is $20/hour A Good Rate?
You have understood that if you are earning $20 a year, your annual gross income will stand at $40,000. After deducting taxes, you will take $30,000 back to your home. This is certainly a praiseworthy figure for executives at the entry-level of their careers. And you can live comfortably with this salary if you have minimal family responsibilities and moderate saving plans.
However, as you move up your life and start building a family and investing in real estate, a higher pay rate will become your need.
How To Increase Your Hourly Rate
If you want to enjoy the lifestyle lived by most middle-class families, the annual gross income of your family should be between $60,000 and $100,000. You can attain this level by either working for a raise or with the help of a partner who is also earning.
Here are a few ways to increase your hourly rate thus bringing it closer to middle-class American’s income.
Specialize in a Marketable Skill
Why would you remain stuck as a skilled worker when you can be a highly skilled one? But before you upgrade your skill set, search the market. What are the most valued skills in your area of work? Which skills pay the most?
You would also want to know the skills that earn your desired hourly rate.
Seek Better Employers
Although most manual jobs see a standard hourly rate across the market, you may still find insignificant differences that arise because of individual companies’ policies and corporate citizenship. Looking in the right places is the key to finding better opportunities.
Certain skills can only benefit businesses and organizations. Some examples of these jobs include plant operation, heavy vehicle operation, and mining. There are other skills that are used only by consumers. Auto mechanics makes a great example of such skills.
But most skills serve both businesses and consumers. These workers include electricians, plumbers, solar installers, and gardeners. If you happen to fall among these workers, you can start a side hustle on top of your day job.
Note that in these extra hours, you are your boss and you can set your rates according to market standards. Mostly, this rate is higher than the rate you can claim at your job or for overtime work.
If your skill’s only target clients are businesses and corporations, your chances of getting a higher rate decline significantly. In that case, you may want to add other skills to your portfolio to start a side-hustle.
But if you are not interested in learning new things or if you are not interested in marketing your talents, you can consider increasing your hours at work. You may get up to 100% extra salary for the hours you work on top of your standard hours.
Most of these strategies require you to put in extra hours – even if it’s only during the learning or research period. This commitment to giving extra hours may not be feasible for every person. If you can’t offer extra hours, your only remaining solution is to re-consider your expenses and try to live on a tight budget.
Jobs That Pay 20 An Hour
Here are a few skills that will enable you to earn $20 per hour at entry-level.
- Dental hygienist
- Occupational therapy assistant
- Sales representative
- Private investigator
- Surgical technologist
- Radiologic technologist
- Aircraft mechanic
- Commercial driver
- Interior designer
- Welder, and Travel agent.
As you can see, only a few of these careers require college degrees. Most of these can be adopted with some occupational training on top of a high school diploma.
Also, note that these jobs offer $20 or a similar rate to entry-level executives. As you move up the career ladder, your pay will also rise.
This article discussed the method to calculate the hourly rate from an annual salary and vice versa. Also, we discussed the living conditions one would experience with a wage of $20 an hour. Although this hourly rate is not the best, it still allows the executive to pay the bills and live comfortably.
However, this pay rate is insignificant if the executive is also responsible to raise a family. In case of extra financial responsibilities, the executive should look for a higher rate or upgrade their skill set.
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